Insolvency fund contributions – employer’s contribution in case of bankruptcy
In 2014, following years of legal proceedings, the (federal German) Social Security Pension Insurance Scheme (Rentenversicherung) finally adopted Interfisc’s standpoint, namely that companies without an actual registered office in Germany are exempt from payment of so-called insolvency fund contributions (Insolvenzgeldumlagen).
Personnel of German nationality or those who work subject to certain terms and conditions in Germany do however retain their entitlement to compensation in the event of bankruptcy (Insolvenzgeld). This meant a substantial savings on wage costs and administrative expenses. In addition, contributions already paid into the scheme were subsequently refunded to all Interfisc customers affected.
The background to this levy is that, in 2009, as a result of an increasing number of bankruptcies, the (German) Federal Labour Office (Bundesagentur für Arbeit) was left with a one-billion-euro shortfall due to the payment of the so-called compensation in the event of bankruptcy.
With compensation in the event of bankruptcy, salaries continue to be paid for three months subsequent to bankruptcy. In an effort to fill this enormous hole, it was decided to levy insolvency fund contributions from companies. But for most of our customers this contribution was not applicable, as they did not have an actual registered office in Germany.
Since 2017, the contribution has been 0.9%. (In 2016, it was 0.12%).
By virtue of a decree by the Social Security Pension Insurance Scheme dating from June 2017, the Federal Labour Office is currently under pressure concerning this decision.
This would imply that insolvency fund levy would apply to companies without an actual registered office in Germany.
We are currently collecting the required information and will inform you as soon as more information is available.
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Since 1972, Interfisc has offered international HR & Payroll solutions in the Netherlands, Belgium, Germany, France, the United Kingdom, and Italy. We do this from our offices in the Netherlands and Belgium, and with an international team of around 45 committed and caring employees.
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